ITAT allows additional depreciation claim, citing Explanation 5 under Section 32(1). Decision reverses CIT(A) order.

The ITAT allowed the appeal, directing the AO to permit the additional depreciation claimed by the assessee. The tribunal found the omission to claim depreciation was inadvertent and not deliberate, citing that Explanation 5 to Section 32(1) applies to additional depreciation. The decision reversed the CIT(A)'s order, emphasizing the validity of the claim and the application of the relevant legal provisions.

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Issues Involved:
1. Rejection of the claim for additional depreciation under Section 32(1)(iia) of the Income Tax Act, 1961.
2. Applicability of Explanation 5 to Section 32(1) concerning the allowance of depreciation.

Detailed Analysis:

Issue 1: Rejection of the Claim for Additional Depreciation
The primary issue in this case revolves around the rejection of the assessee's claim for additional depreciation on plant and machinery amounting to Rs. 6,29,28,039/-. The Assessing Officer (AO) disallowed the claim on the grounds that the assessee failed to file a revised return by the deadline of 31.03.2011. The CIT(A) upheld this decision, relying heavily on the Supreme Court's ruling in Goetze (India) Ltd. vs. CIT, which stated that claims for deductions must be made through a revised return and not by a letter during assessment proceedings.

The assessee argued that the situation was similar to a previous case involving its sister concern, where the ITAT Amritsar Bench had ruled in favor of the assessee. The assessee also contended that the omission to claim additional depreciation was inadvertent and not deliberate or malafide. The ITAT examined the facts and found that the omission was indeed inadvertent, referencing the Bombay High Court ruling in Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders Pvt. Ltd., which supported the notion that appellate authorities have the jurisdiction to consider additional claims even if not initially filed.

Issue 2: Applicability of Explanation 5 to Section 32(1)
The second issue pertains to whether Explanation 5 to Section 32(1) of the Income Tax Act, which allows for depreciation whether or not claimed by the assessee, applies to additional depreciation under Section 32(1)(iia). The CIT(A) held that Explanation 5 applies only to normal depreciation and not to additional depreciation. However, the ITAT disagreed, stating that both normal and additional depreciation are part of Section 32(1) and thus, Explanation 5 should apply to both. Consequently, the ITAT directed the AO to allow the additional depreciation as per law.

Conclusion:
The ITAT concluded that the assessee's claim for additional depreciation was valid and should be allowed. The tribunal noted that the omission to claim the depreciation was inadvertent and not deliberate. It also clarified that Explanation 5 to Section 32(1) applies to additional depreciation under Section 32(1)(iia). Therefore, the ITAT reversed the order of the CIT(A) and directed the AO to allow the additional depreciation. The appeal of the assessee was allowed.

Order:
The appeal filed by the assessee was allowed, and the AO was directed to allow the additional depreciation as per law. The order was pronounced in the open court on 17.3.2015.

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